Global uncertainty may delay, but not derail, interest rate relief

Published July 2026

Article insights:

• South Africa’s economic outlook is improving, supported by stronger GDP growth, easing fuel prices and moderating inflation.
• Ongoing conflict in the Middle East could delay interest rate relief by increasing global inflationary pressures through higher oil and commodity prices.
• BetterBond data shows home loan application volumes remain resilient despite the recent 25-basis-point repo rate increase.
• Economists are divided on the outcome of the next Monetary Policy Committee meeting, with expectations split between a rate hold and a further increase.
• If inflation continues to ease and global risks diminish, rate cuts could resume later in 2026 or early 2027, offering future interest rate relief for homeowners.

Despite South Africa’s improving economic fundamentals, escalating tensions in the Middle East could mean homeowners will have to wait longer for interest rate relief on their monthly bond repayments. BetterBond’s July Property Brief points to an improving domestic outlook, supported by stronger GDP growth, easing fuel prices and early signs of moderating inflationary pressures.

A recent (15 July 2026) comment from Investec also notes that changes to the weighting of food in the Consumer Price Index mean food price shocks are likely to have a smaller impact on headline inflation than in the past, supporting a more favourable inflation outlook and improving the prospects for future repo rate cuts.

The rand has also remained firm in recent months, trading around 8% stronger against the US dollar than it was a year ago. A stronger currency has helped contain imported inflation, but sustained increases in oil prices could offset some of those gains.

The resilience is evident too in the property market. BetterBond’s recent data shows that, despite May’s 25‑basis‑point increase in the repo rate to 7%, home loan application volumes have remained strong, sitting 5.7% higher than they were two years ago.

However, renewed conflict in the Middle East has made the global economic outlook more uncertain. Higher oil and commodity prices could filter through to inflation worldwide, while rising electricity costs continue to place pressure on prices locally. Together, these factors could see the Monetary Policy Committee (MPC) taking a cautious approach at next week’s repo rate meeting.

Economists remain divided on the possible outcome. Some, including Bank of America, expect a 25-basis-point increase in the repo rate as inflation moves above the Reserve Bank’s preferred inflation target range. Others believe the Reserve Bank has done enough to curb inflation and will opt to keep rates unchanged while monitoring global developments and local risks.

On balance, we expect the MPC to hold the repo rate steady next week as it assesses the potential impact of the recent flare-ups on inflation and the broader economic outlook. However, a further 25-basis-point increase cannot be ruled out should the committee decide that inflationary challenges require further action.

Looking ahead, the interest rate outlook will depend on whether inflation continues to ease. If price pressures remain contained and global risks subside, the MPC could be in a position to resume its rate-cutting cycle later this year or in early 2027. Until then, homeowners and prospective buyers should plan for a higher interest rate environment and spend conservatively.